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USD/CAD trades in red below 1.3300 amid crude oil recovery

  • WTI rebounds on Tuesday, gains 2% above $50.50.
  •  US Dollar Index struggles to extend rally into seventh straight day.
  • FOMC Chairman Powell to testify before Congress at 15:00 GMT.

The USD/CAD pair advanced to its highest level since early October at 1.3329 on Tuesday but reversed its direction with the recovering crude oil prices helping the commodity-sensitive CAD gather strength against the greenback. As of writing, the pair was down 0.17% on the day at 1.3293.

Although Russian Energy Minister Alexander Novak said they haven't yet decided whether they will implement the additional oil output cuts recommended by the OPEC+ Joint Technical Committee (JTC), crude oil's oversold nature triggered a technical rebound. As of writing, the barrel of West Texas Intermediate was trading at $50.60, adding 2% on a daily basis. 

Focus shifts to FOMC Chairman Powell's testimony

During the American session on Tuesday, FOMC Chairman is scheduled to testify before the Committee on Financial Services of the Congress. Powell is not expected to provide any fresh clues regarding the policy outlook and he is likely to reiterate that the policy will remain appropriate until they see a convincing pickup in inflation.

Ahead of this event, the US Dollar Index, which closed the last six days in the positive territory and rose to its highest level since early October at 98.91, is registering modest daily losses near 98.80.

There won't be any significant macroeconomic data releases from Canada in the remainder of the week, suggesting that the USD's and crude oil's performance are likely to continue to drive the pair's action.

Technical levels to watch for

 

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